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ANALYSIS OF PRICE VARIATION AND MARKET INTEGRATION OF prosopis africana (GUILL. & PERR.) TAUB. SEEDS DURING THE WET SEASON IN METROPOLIS, ,

By Ancha, P.U1*., G.A. Abu2 and O. F. Omafu3 1*&3 Department of Social and Environmental Forestry, University of Agriculture, PMB 2373 Makurdi, Benue State, Nigeria. 1*Corresponding Author: [email protected] 2. Department of Agricultural Economics, University of Agriculture, PMB 2373 Makurdi, Benue State, Nigeria.

ABSTRACT The study was conducted to provide information on price variation and market integration of Prosopis africana seed marketing for a period of four months in Makurdi Metropolis, Benue State. Nigeria. The study seek to test the hypothesis that there is no significant difference between mean amount of Prosopis africana seeds sold and the Total Variable Cost (TVC) incurred. Purposive sampling technique was used to select five markets based on the presence of traders selling the commodity in the markets. Ten traders were also selected purposively in each of the markets, giving a sampling size of 50 respondents. Semi-structured questionnaire was used to obtain marketing variables from the traders. Descriptive statistics, Correlation and Gross Margin analysis were used to analyze the objectives of the study. The results shows that more than half of the traders 52% belong to the age bracket of 40-59 years and 60% had no formal education. There was a net positive weekly Gross Margin (GM) in all the markets; North Bank N80,320, Wurukum N72,080, Wadata N62,520, High Level N14,240 and Modern Market N130,510. Wadata and Modern markets were more integrated (0.861) than other market pairs. T- test result showed that Prosopis africana seed trade is profitable and should be encouraged. Since the commodity is harvested in the wild, plantation establishment of the tree species is recommended to ensure sustainability of the resource and trade.

Key words: price, variation, gross margin, Prosopis africana.

Introduction The supply of forest products is affected by natural Forest provides man with economic benefits; factors such as weather, diseases or pests. both tangible and intangible. These benefits Furthermore, inadequate storage facilities for can be grouped into direct and indirect uses, producers to store food commodities and thus option and non use values. Only some of these balance the supply of such commodities values are reflected in market prices, due to throughout the year also affect the supply. imperfections and policy failures (Bishop, Consequently, these commodities become scarce 1998). Price has been described by Olayemi, at off production seasons, rendering the products (1976) as the chief agent through which the expensive due to scarcity (Livinstone and Ord, quantities of factors supplied and demanded are 1988). After goods and services desired by brought into a state of equilibrium in the market. consumers are produced, price guide them Price change on the other hand is the adjustment through the channels of trade so that they end up mechanism by which this equilibrium is attained where consumers want them and in good form. in the market (Ojo, 1976).

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ANALYSIS OF PRICE VARIATION AND MARKET INTEGRATION OF PROSOPIS AFRICANA (GUILL. & PERR.) TAUB. SEEDS DURING THE WET SEASON IN MAKURDI METROPOLIS, BENUE STATE, NIGERIA The interrelationship between price movements in A major cause of concern to the farmers, policy two markets is defined as market integration makers and consumers is the frequent fluctuation (Abbott et.al., 1979). The transformation of the in food prices and inadequate information on economics of most developing countries from prices of food commodities for planning, agriculture to more industrialized economies is budgeting and projection of the enterprises. Prices making forest products marketing an important of food crops are constantly fluctuating and the area that can no longer be ignored. The rapid trend is forecasted as continuous (Oyedeji, 1990). increase in population growth especially in the Prices for same quantity and quality of a given urban areas is putting a lot of pressure on the commodity at different locations are not always demand, production and marketing of forest goods the same at a given point in time. They do also vary and services; the pricing and the marketing from season to season. For agricultural systems must therefore be efficient to cope with commodities, prices are readily obtained at these pressures (Hays, 1975). markets; however, data and information on prices of most forest products are not readily and Prosopis africana is a forest tree legume which adequately available. Thus, planning for forest does not largely depend on use of artificial based enterprises is difficult. In addition, most fertilizers for its growth. The tree fix atmospheric funding agencies in the developed world such as nitrogen and produces protein rich leaves and the FAO and UNCEF among others require a firm beans which have long been recognized as indication of monetary values of projects for valuable food stuff. The seeds are very important sponsorship (Kengen, 1997). to the economy and subsistence of the rural people. The seeds are widely used by many ethno Price analysis is used as a tool for getting price linguistic groups in the region of levels for commodities and it also avails Nigeria including Tiv and Idoma in Benue state, producers/farmers the knowledge of what should Igala and Igbira in . Agboola and Kadiri be produced and quantity to produce to make (1998) remarked that the seeds are used in maximum profit with minimum inputs. The preparing a spice “Gbaaye” in Tiv or “Okpehe” in consumers are also informed of the food products Idoma. In addition, this food condiment is a available in the market and at what prices. Price fermented product rich in protein and fatty acid linkages among the various markets are expected contents (Sanni et al., 1993 a and b). The seeds of to result in arbitrage process where prices vary to this forest product are usually harvested in the accommodate various marketing functions of wild and sold in the markets; the market for this time, place, form and possession utility e.g. product in the study area is gaining prominence as transportation, storage, processing and other the seeds are consumed by majority of the people. transaction cost. Knowledge of the relationship However, there is no adequate data and between prices in various markets would therefore information on trade in this forest product for be a veritable tool for planning and decision- planning and decision-making concerning its making. Price trend analysis help in making market development. projection, hence planning and budgeting for any enterprise could be easily achieved.

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It is against this background that this study was administered to Prosopis africana seed traders in conducted to examine price variation, determine Makurdi metropolis to obtain information on the profitability and assess market integration of prices of the seeds (bought and sold), quantity of Prosopis africana seed marketing in the study seeds sold in kilograms and the costs incurred area. The study also seek to test the hypothesis that (Transport, labor, rent and local government there is no significant difference between the charges) were obtained twice in a month for four mean amount of Prosopis africana seeds sold and months (June to September, 2008) in each of the the total Variable Cost TVC) incurred. markets and the weekly means of the transaction obtained. Methodology Study Area Statistical Tools The study was carried out in Makurdi metropolis Socio-economic attributes of traders were located between latitudes 7o20' and 8o10' North analyzed using descriptive statistics. Time series and longitudes 8o4' and 9o40' East. The mean analysis was used to achieve price variation of annual temperature is about 32oC with an annual Prosopis africana seed marketing in the study rainfall of 1500-1800 millimeters. The important area. To obtain the pattern of price movement, the geographical feature of the area is the River Benue mean price per bag per week of the traders in each which divides the area into the north and south of the markets for the commodity was obtained banks. Makurdi Metropolis is made up of 4 wards and plotted against the number of weeks for the namely North Bank I, Wailomayo, High Level, study period. Correlation analysis was used to Ankpa/Wadata and Modern Market council analyze degree of integration between markets. wards. Makurdi has a population of about 297,398 According to (Abu, 1996), Correlation co- people (NPC 2006). efficient gives the degree of integration between markets. The higher the price correlation between Sampling Procedure pairs of markets for a particular product the more The population of the study comprised of Prosopis integrated are the markets for that product (Raju africana seed traders in Makurdi metropolis. and Von, 1980). Purposive sampling technique was used to select five markets based on presence of traders selling Gross Margin Analysis (GM) was used to achieve this commodity. Ten traders in each of the markets profitability of the seed marketing in the study were purposively selected for interview. Therefore area. Gross Margin Analysis is expressed as: GM the sampling size for the study was 50 traders. = TR – TVC Where GM = Gross Margin, Data Collection TR = Total Revenue and The study made use of both the primary and TVC = Total Variable Cost. secondary data. The primary data were collected Results with the aid of semi-structured questionnaire Socio-economic Attributes of Traders while the secondary data were collected from Socio-economic attributes of Prosopis africana relevant literature materials. Questionnaire seed traders are shown on Table 1. The age designed to cover the objectives of the study was distribution of the traders shows that more than

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ANALYSIS OF PRICE VARIATION AND MARKET INTEGRATION OF PROSOPIS AFRICANA (GUILL. & PERR.) TAUB. SEEDS DURING THE WET SEASON IN MAKURDI METROPOLIS, BENUE STATE, NIGERIA half (52%) of the traders sampled were in the 40- Gross Margin Analysis for Prosopis africana 59 years age bracket. There was no trader in the Seed Marketing “less than 20 years” age bracket. Few of the The Gross Margin (GM) analysis for Prosopis traders (32%) were in the 21-39 years age bracket africana seed marketing is shown on Table 4. while (16%) were in the 60-70 years age bracket. Modern market had the highest market GM of N13,0510 and also the highest weekly GM of The marital status of the traders showed that more N13,051 per trader while Wurukun market had the than half of the traders (58.0%) are married while least market GM of N72,080 and also least weekly only (2%) was single. Few traders (16.0%) were GM of N7,208 per trader. However, North Bank divorced while separated and widow/widower had the highest marketing activity with 93 bags of traders were (10%) and (17.0%) respectively. Prosopis africana seeds sold weekly, followed by Wurukum market (75), Modern market (64), Educational level of the traders revealed that most Wadata market (61) and lastly High-level market of the traders (66.0%) have no formal education. with 15 bags sold weekly. Traders with primary, post-primary and post secondary education were (26.0%), (6.0%) and Test of Hypothesis (2.0%) respectively. HO: There is no significant difference between mean amount of Prosopis africana seeds sold and All the traders sampled for this study were females the Total Variable Cost (TVC) incurred. The result (100%). In addition there was no whole seller of t-test (Table 5) shows a significant difference at found dealing in these two commodities as all the 0.05 significance level (t= 3.87, P<0.05). This traders reported on retail trading (100%). shows that trade in Prosopis africana seeds in the study area is profitable. Marketing Experience of Traders The result presented in Table 2 shows marketing Market Integration of Prosopis africana in Five experience of the traders. Few traders (30%) were Markets in the trade between 16-20 years, 11-15 years Table 6 shows the correlation amongst the five (26%), 6-10 years (24.0%) while traders with markets for Prosopis africana seed marketing. more than 20 years experience were (14%). Correlation analysis shows a high integration Furthermore, (6%) of the traders were in the trade value of 0.861 between Wadata and Modern between 1-5 years. markets; and 0.847 between Wurukum and North Bank markets. There was a weak integration value Reasons for Trading of 0.352 between North Bank and Modern Majority (70%) of the traders reported that better Markets. income was their main reasons for being in the trade as shown on Table 3. Other reasons put Pattern of Weekly Price Variation for Prosopis forward by the traders is lack of money to continue africana Seed Marketing schooling (14%) and following footsteps of The pattern of the weekly price variation for parents (16.0%). Prosopis africana seed marketing is shown in Fig 1. There was a general irregular upward price

JOURNAL OF RESEARCH IN FORESTRY, WILDLIFE AND ENVIRONMENT. VOLUME 3 NO. 2 SEPTEMBER, 2011 74 movement in the five markets. However, the Wurukum market had the highest observed price prices in Wadata market were fairly stable at the 7th week while Modern market had the least between the 6th to the 8th weeks under study. price at the 1st and 8th week.

Table 1. Socio-economic Attributes of Traders

Attributes F %

Age

Less than 20 - -

21-39 16 32 40-59 26 52 60-70 8 16 Total 50 100

Marital Statu s Singl e 1 2 Married 29 58 Divorce d 8 16 Separated 5 10 Widow(er) 7 14 Total 50 100

Educational Level No Formal Edu . 33 66 Primar y 13 26 Post Primary 3 6 Post Secondary 1 2 Tota l 50 100

Gender Femal e 50 100 Total 50 100

Type of Trader

Retailer 50 100

Total 50 100

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ANALYSIS OF PRICE VARIATION AND MARKET INTEGRATION OF PROSOPIS AFRICANA (GUILL. & PERR.) TAUB. SEEDS DURING THE WET SEASON IN MAKURDI METROPOLIS, BENUE STATE, NIGERIA Table 2. Marketing Experience of Traders Experience (yrs) F %

1- 5 3 6 6-1 0 12 24 11-1 5 13 26 16-2 0 15 14 Above 20 17 14 Tota l 50 100

Table 3. Reasons for Trading Reason s F %

Lack of money to continue schooling 7 14 Better income earning 35 70 Following footsteps parents 8 16

Tota l 50 100

25000

) 20000 N (

N/B g

a 15000 WUR B

r H/L e p 10000 MOD e c i

r WAD P 5000

0 1 2 3 4 5 6 7 8 Number of Weeks

Fig.1: Weekly Prices of Prosopis africana Seeds in Makurdi Metropolis

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Table 4. Gross Margin Analysis for Prosopis africana Seed Marketing in Makurdi Metropolis B X D C X D I + J K-L A B C D E F G H I J K L M N Market E+F+G+ H Tra- Amount Weekl Weekly variable cost(N) Total Total amount TVC GM GM/ ders Bough So ld y Transpo La bou Ren L.G. weekly Bough Sold (N) (N ) Trade t (N) Qty rt r t C va riable t (N) (N) r (N) (N) sold(N (N) (N) (N) (N) cost(N) ) North 10 17150 18000 93 550 30 0 250 80 1180 15 9250 167400 159368 80320 8032 Bank 0 0 0 0 0 Wurukum 10 17000 18000 75 760 330 380 80 1550 127650 135000 127805 72080 7208 0 0 0 0 0 Wadata 10 16950 18020 61 490 360 250 80 1180 103550 1099 20 103668 62520 6252 0 0 0 0 0 High 10 16950 18020 15 490 34 0 250 80 1160 255 000 270400 256160 14240 1424 level 0 0 modern 10 16050 18020 64 790 470 250 80 1590 102050 115260 102209 13051 13051 0 0 0 0 0 0

Source: Field Survey, 2008. 1 Bag = 151.2kg.

Table 5. T- test between Total Amount of Prosopis africana Seeds Sold and Total Variable Cost Marke ts Total amount Total Variable T Prob. Sold Cost

North Ban k 1674000 1593680 3.87 0.018

Wurukum 1350000 1278050

Wadata 1099200 1036680

High Leve l 270400 256160

Modern 1152600 1022090

Mean 1109240 1037332 Significance level = 0.05

Table 6. Correlation amongst Five Markets for Prosopis africana Seeds Marketing

Market s Correlation

High Leve l 1.00

Modern 0.00 1.00

North bank 0.00 -0.352 1.00

Wadata 0.00 0.861 -0.501 1.00

Wurukum 0.00 -0.374 0.847 -0.601 1.00

High level Modern North Bank Wadata Wurukum

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ANALYSIS OF PRICE VARIATION AND MARKET INTEGRATION OF PROSOPIS AFRICANA (GUILL. & PERR.) TAUB. SEEDS DURING THE WET SEASON IN MAKURDI METROPOLIS, BENUE STATE, NIGERIA Discussion markets studied; however, Modern market The socio-economic attributes of traders in recorded the highest weekly GM of N13,051 per Makurdi metropolis, Benue State is an indication trader while Wurukum market had the least GM of that trade in Prosopis africana seed is an income- N7,208 per trader. This result indicates that generating venture. This is observed by the Prosopis africana seed trade can support number of years put into the trade by the traders livelihood of the rural people. Therefore Modern and the gross margins of the trade in the different market could be recommended for any trader who markets. Thirty percent of the traders put in wishes to go into the trade of Prosopis africana between 1 – 10 years while others were involved in seeds in the study area since it had the highest the trade for more than ten years. Marketing gross margin. experiences could increase trader's profit margin as the trade is based on bargain. Female traders Only few markets were highly integrated; there (100%) dominated the retail trade; however, there was high price integration of 0.861 value between was no male trader in the retail trade. This finding Wadata and Modern markets and 0.847 value is in line with Awono et al., (2002). They between Wurukum and North Bank markets concluded that, in , women dominated which could be attributed to the closeness in their the retail trade in Dacroyodes edulis (Safou) while location and flow of information between the men concentrated on wholesale trade. Results markets. However, weak integration values were further showed that most of the traders were recorded between North Bank and Modern illiterates. This finding is also in line with Soaga, markets which could be due to long distance (2001). He observed a high level of illiteracy between these markets. Information helps to among traditional forest product entrepreneurs in balance supply and demand in markets and thus parts of . Low illiteracy level has been avoid gluts and surplus with their corresponding identified as the bane of poverty amongst other fluctuations in prices. Price fluctuation and factors (FAO, 1997) problems of uncertain prices may arise mainly from the fact that most traders are either The absence of traders of less than 20 years in the inaccurately informed about prices in the markets trade could be as a result of many persons in this in which they sell and sometimes almost totally age group being in school within and outside their uninformed about prices outside the market in localities. Also the low number of persons in the which they sell (Olukosi, 1990). age bracket of 60-70 years could be that these persons might have left the trade for their children Conclusion due to old age or might have taken to other The study concludes that the price of Prosopis businesses. Better income was the main reason for africana seeds sold varies between markets in the trading in Prosopis africana seeds. Other reasons study area; however marketing of the seeds is provided by the traders were lack of money to profitable and capable of supporting livelihoods. continue schooling and following the footsteps of Some of the markets were more integrated than parents. others showing the level of closeness and flow of information between the markets. There was a positive net gross margin in all the

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